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Appeared on: Friday, August 29, 2003
Philips calls for open standards for electronics

The head of Philips, Europe's largest consumer electronics maker, called on its rivals on Friday to expand collaboration that would include more open standards and shared development of new technologies.

"We need a fundamental change to the business model if we are to take our industry into a new growth era," Philips Chief Executive Gerard Kleisterlee said in a speech given at the IFA trade fair in Berlin, according to a company statement.

Philips, one of the creators of the compact disc and DVD technology, also said consumer electronics groups should concentrate more on continuous innovation to differentiate themselves from low-cost competitors.

Despite its own innovation, the Dutch company has had a tough time squeezing significant profits from its own inventions as mostly Asian rivals often introduce cheaper alternatives.

Last month Europe's largest maker of lighting and number three chip producer said it expected to reap an extra $435.2 million in annual savings by 2005 at its consumer electronics division by sharpening the unit's focus.

That was on top of the one billion euros in cost savings it plans to have achieved by the end of 2003.

Philips posted a record net loss in 2001 and remained loss-making last year as it faces a worldwide economic slowdown, a drop in demand for semiconductors and intense competition from new and existing Asian rivals.

Facing fierce competition and low margins, it has outsourced most of its consumer electronics production to contract manufacturers such as Jabil Circuit Inc, concentrating its own resources on research, design and marketing.